Canada thwarts "al Qaeda-backed" train plot, Iran denies role

TORONTO (Reuters) - Canadian police have arrested two men and charged them with plotting to derail a Toronto-area passenger train in an operation that they say was backed by al Qaeda elements in Iran.

"Had this plot been carried out, it would have resulted in innocent people being killed or seriously injured," Royal Canadian Mounted Police official James Malizia told reporters on Monday.

U.S. officials said the attack would have targeted a rail line between New York and Toronto, a route that travels along the Hudson Valley and enters Canada near Niagara Falls.

The RCMP said it had arrested Chiheb Esseghaier, 30, of Montreal, and Raed Jaser, 35, of Toronto in connection with the plot. Authorities said it was not linked to last week's Boston Marathon bombings, which killed three people and injured more than 200.

Neither suspect is a Canadian citizen, and police did not reveal their nationalities. Two sources following the investigation said one was Tunisian.

Canada's intelligence agency has long expressed concern about the possibility that disgruntled and radicalized Canadians could attack targets at home and abroad.

Police gave little detail about the alleged plotters, but said a tip from the Muslim community had helped their year-long investigation.

Esseghaier has been a doctoral student at the Institut National de la Recherche Scientifique near Montreal since 2010 and was about midway through his degree, the school said.

"He is doing a PhD in the field of energy and materials sciences," said Julie Martineau, the school's director of communications.

A bail hearing for the two men was due to take place in Toronto on Tuesday morning.

"AL QAEDA ELEMENTS"

Malizia said they had received "support from al Qaeda elements located in Iran", but added that there was no sign that the conspiracy, which police described as the first known al Qaeda-backed plot on Canadian soil, had been sponsored by the Iranian state.

Nevertheless, Iran reacted angrily. Canada last year severed diplomatic ties over what it said was Iran's support for terrorist groups, as well as its nuclear program and its hostility towards Israel.

"No shred of evidence regarding those who've been arrested and stand accused has been provided," Iranian Foreign Ministry spokesman Ramin Mehmanparast said on Tuesday, according to the Mehr news agency.

He said al Qaeda's beliefs were in no way consistent with the Islamic Republic, and that Iran opposed "any kind of violent action that endangers lives".

"In recent years, Canada's radical government has put in practice a project to harass Iran and it is clear that it has pursued these hostile actions," he added.

Al Qaeda is strongly Sunni Muslim-oriented. Shi'ite Iran did host some senior al Qaeda figures under a form of house arrest in the years following the September 11 attacks, but there has been little to no evidence of joint attempts to stage attacks against the West.

However, a U.S. government source said Iran was home to a little-known network of al Qaeda fixers and "facilitators" based in the Iranian city of Zahedan, very close to Iran's borders with both Pakistan and Afghanistan.

GO-BETWEENS FOR AL QAEDA

The source said they serve as go-betweens, travel agents and financial intermediaries for al Qaeda operatives and cells operating in Pakistan and moving through the area.

They do not operate under the protection of the Iranian government, which periodically launches crackdowns on al Qaeda elements, though at other times it appears to turn a blind eye to them, according to the source.

The region is one where Iranian authorities have battled a Sunni insurgency of their own in recent years from Sunni Muslims complaining of discrimination. The Jundollah group, believed to be based across the border in Pakistan, has claimed several attacks including a bombing that killed 42 people in 2009, and attacks on mosques in Zahedan and elsewhere in the region.

Michael Stephens of the Royal United Services Institute, based in Qatar, said it was very unlikely that Iran could have given any direct support to the Canadian plot.

"It is difficult to make the connection of Iran trying to hit North America using al Qaeda as the vector," he said. "The idea of Salafist jihadis (such as al Qaeda) sitting and talking to Iranians is very far fetched."

Canadian police said the plot had involved a train route in the Toronto area, but declined to be more specific.

Malizia said the RCMP believed the two suspects had had the capacity and intent to carry out the attack, but there had been no imminent threat to the public, passengers or infrastructure.

The plot is one of a handful of terrorism-related investigations involving Canadians or Canadian residents.

Police said this year that Canadians had taken part in an attack by militants on a gas plant in Algeria in January, while Canadian and Somalia authorities are investigating whether a former University of Toronto student participated in a bomb attack in Mogadishu last week.

And in 2006, police arrested and charged nearly 20 Toronto-area men accused of planning to plant bombs at various Canadian targets. Eleven were eventually convicted.

(Additional reporting by Mark Hosenball in Washington, Louise Egan in Ottawa and Marcus George in Dubai; writing by Cameron French; Editing by Kevin Liffey)